Rob Reich is worried about school inequality. (Longer, more fun version here.) When it comes to education, as in so many other fields, the rich just get richer, leaving everybody else behind. His Exhibit A: the parents of wealthy Hillsborough, California, who between them donate some $2,300 per child per year — all of it fully tax-deductible — to supplement the money coming from the state. This, says Reich, is not what charitable deductions are for:
If you wanted to engineer the strongest possible recovery in the US economy, you would try to create two things. First, and most important, you would want robust jobs growth, with employers adding positions, the unemployed — and especially the long-term unemployed — finding new jobs, and the proportion of Americans with jobs rising steadily. Secondly, you would want to introduce errors into the monthly jobs report. You would try to make jobs growth seem weaker than it really was, and unemployment higher. By doing that, you would keep monetary policy — and market expectations for future monetary policy — as accommodative as possible. That in turn would keep both short-term and long-term rates low, which would provide extra fuel for the recovery.
This time last year, Peter Eavis came out with a pair of columns asking the question: why were mortgage rates so high? Back then, the typical 30-year mortgage cost 3.55% — more than 140bp above prevailing mortgage-bond rates. Given that banks normally lend out at only about 75bp above mortgage-bond rates, said Eavis, mortgage rates should by right have been much lower.
Price discrimination is one of those concepts that only an economist could love. But the theory is clear: the more that a vendor can discriminate according to willingness to pay, the more value that vendor can add. Rory Sutherland uses air travel as an example: having a mix of classes allows price-sensitive people to pay low fares, while the rich have a large number of flights to choose from. On top of that, he could have added, airlines are extremely good at exercising price discrimination within classes, so that two people receiving identical service might be thousands of dollars apart in the amount they paid for their tickets.
Many thanks to Ben Walsh for pulling together the data for this chart. The numbers speak for themselves, really: over the course of Steve Ballmer’s tenure as Microsoft CEO, the company’s stock price has gone nowhere, its market share has plunged — but its headcount has more than trebled. And that’s before adding another 32,000 employees as part of the Nokia acquisition.
This happens every time something goes wrong on the stock market — every time there’s a flash crash, or a high-frequency trading firm blows up, or the Nasdaq is forced to go dark for three hours. A bunch of editors who don’t really know anything about HFT ask for stories about it, and they all want the same thing: a tale of how a small group of high-speed trading shops, armed with state-of-the-art computers, are using their artificial information advantage, and their lightning-fast speed, to extract enormous rents from the little guy.